Edinburgh’s short-term let licensing scheme came into force this month (October 2023) which means many of the city’s landlords are now faced with decisions about the future of their properties.
Anyone who has used their property for short-term lets prior to 1 October 2022 must have submitted an application for a licence to Edinburgh City Council by 1 October 2023 to continue trading.
New short-term let landlords, or those who have only been letting their properties since 1 October 2022, must wait until their licence has been granted by the city council before they can take bookings.
Whatever the situation, all operators of Edinburgh’s Airbnbs and short-term lets must have a licence by 1 January 2025. But for some landlords the prospect of continuing to operate a short-term letting business looks unlikely, so what are the alternatives?
Requirements Of The New Short-term Let Licensing Scheme
The conditions that need to be met mean thousands of landlords who previously operated short-term lets will no longer be eligible. Change of use planning permission is required for most properties, which is unlikely to be granted if there is a shared entrance – the case with most city-centre flats and apartments.
Properties don’t require planning permission for change of use if the landlord can prove they have been operating a short-term let for 10 years or more – but many will not have kept documentation to provide this to the city council.
The original legislation - the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022 – presumed that all properties in tenement buildings with shared entrances and hallways were unsuitable as short-term lets due to possible issues with noise and anti-social behaviour.
This was challenged in the Court of Session and upheld, but the need for planning permission as part of the application process means these properties are still unlikely to be granted licences.
What If Short-Term Letting Isn’t An Option?
Landlords who can’t get planning permission for change of use are left with an empty property that’s not generating an income. They can revert to using it for personal use, but in the current economic climate this isn’t a popular choice. However, there are other options such as selling the property or switching to commercial or long-term lets which don’t have the same requirements as short-term lets.
Short-Term Let Licence Applications
It’s estimated that there are up to 10,000 short-term let properties in Edinburgh, yet only a few hundred have so far applied for licences. This is no wonder given that it is a costly and lengthy process with no guarantee of success – and so far only a handful of licences have been granted.
Clan Gordon Managing Director Jonathan Gordon comments: “If campaigners are to be believed, only eight applications were approved out of 400 submitted.
“Lots of landlords haven’t applied yet because they don’t think they’ll get planning permission. It costs £750 for the planning application, and then it can be thousands for the licence depending on the size of the property so nobody wants to do it.
“With the planning application, if you’ve got a shared entrance there’s a fair chance the change of use won’t be granted so landlords are looking for other options that are less complex and less costly.”
Should you sell your Edinburgh property rather than rent it out?
Edinburgh is one of the UK’s most desirable cities to live and work in so property is always at a premium. If the short-term let scheme is proving problematic for you, landlords can consider selling the property and investing the money elsewhere – or buying another property more suited to Airbnb or short-term let use.
Corporate Letting as an alternative to short-term lets
Corporate letting is when a company rents a property for employees to use when visiting the area, or when an employee has relocated from elsewhere in the country or from overseas.
This is another option for landlords to consider, but the corporate lettings market has significantly dwindled since the pandemic because budgets have been squeezed. Employees are now more typically given a relocation allowance to find their own accommodation, and hotels can be more cost-effective for occasional stays than letting a property full-time.
When do long-term lets make sense as an Airbnb alternative in Edinburgh?
For most landlords, the option that offers the best return with minimum disruption is switching to long-term lets. While permanent tenants might not immediately be as lucrative as a string of short holiday lets to tourists, over time they provide a reliable, steady income and require far less time and attention.
There are also other benefits. The property is far less likely to sit empty without earning money – especially given current market demand. Long-term tenants are also more likely to take care of the property and treat it like a home rather than they would a holiday bolthole for ever-changing visitors.
Landlords can also hand the whole process over to a letting agent who will source tenants, make sure the property meets all the legal and safety requirements and manage the tenancy.
Frequent changeovers cause hassle and expense for short-term let landlords
For a landlord who has been used to managing a calendar of frequent changeovers and property cleans, a long-term let removes all the stress and offers a guaranteed regular income with far less likelihood of emergency callouts and dramas.
However, the crackdown on properties offered for short-term rent will certainly have an impact on Edinburgh’s tourism industry and may affect people’s future travel plans. Visitors heading to the city for Edinburgh Fringe and other festival events will have fewer options for rentals, and demand will exceed supply more than ever. Once property owners have withdrawn from the short-term rental market they are unlikely to return to the sector, and travellers will be forced to look to other options.
If you’re a short-term let landlord who needs information and advice about long-term lets in the capital, talk to the city’s award-winning letting agent with more than 15 years experience in the local housing market. We can answer all your questions and offer impartial advice about your best options – click here to schedule a call with one of our expert advisors.